|By Alexander Cornwell

DUBAI (Reuters) - Emirates' announcement on Monday that it would start flying to the United States with a stop for passengers in Greece sparked a strong reaction from a lobby group representing U.S. competitors who accused it of competing unfairly through state subsidies.

The world's largest long-haul airline said it would start daily flights to New Jersey's Newark Liberty International Airport via Athens on March 12.

Emirates was "flagrantly violating" the air services agreement that allows it to fly to the United States, said the Partnership for Open & Fair Skies, which represents Delta Air Lines <DAL.N> and other U.S. airlines.

Accusing Emirates of "throwing down the gauntlet," the group said it would discuss the matter with the new administration of President Donald Trump to "protect American jobs."

The Dubai-Athens-Newark route would be Emirates' second so-called 'fifth freedom' flight to the United States in addition to an existing daily Dubai-Milan-New York service. It also operates three daily direct Dubai-New York flights.

Fifth freedom rights allow an airline to fly between foreign countries as a part of services to and from its home country.

Delta and other U.S. airlines have accused major Gulf carriers -- Emirates, Abu Dhabi's Etihad Airways and Qatar Airways - of receiving over $50 billions in unfair subsidies. The Gulf carriers deny the allegations.

The Obama administration began informal consultations with the United Arab Emirates and Qatar on the issue, but no agreement was reached before President Obama's term ended.

The group, which also includes United <UAL.N> and American <AAL.O>, was always likely to try and block the new service before it starts, said Will Horton, senior analyst at CAPA Centre for Aviation.

However, the U.S. carriers would have a hard time arguing the flight was damaging to their interests, given that U.S. carriers do not fly to Greece all year round, Horton said in emailed comments. He also said that the fact that Emirates was an important customer for U.S. planemaker Boeing <BA.N> would also work against the group.

Emirates President Tim Clark said the Greek government approached the airline "some time ago" to start a flight between Athens and New York, according to an airline statement.

Emirates has previously said it could fly to the United States from European hubs and in 2016 the Hungarian government said the airline could fly fifth freedom routes from its capital, Budapest.

(The story clarifies status of Obama administration, US airline lobby and Gulf states on airlines.)